Tips on Preparing For a Financial Emergency

Financial Wellness

Are you ready for the unexpected?

When a financial disaster strikes, you want to be prepared. To adequately prepare for the unexpected, such as accidents, health issues, natural disasters, or job loss, you’ve got to start today. Here are some things you can do to be ready for a financial emergency.

Start with Your Budget

Make sure you have a solid household budget in place. If your budget is in order, you’ll be less impacted by a financial pitfall. Go through your budget and make sure it is up to date. Ideally, you want to have the following things in proper order:

Income. Identifying all income sources and monetary amount coming in every month
Insurance. Lower your financial risk with the proper health, car, home, and life insurance coverage
Expenses. Know how much it costs each month to maintain your current lifestyle

Boost Your Emergency Fund

Your emergency savings is called that for a reason, so in these situations that brin unexpected expenses, you have the savings to cover it without using high-interest credit cards.

Add up your monthly expenses (ex. $2,500 in total)
Multiply that number by six (ex. $2,500 x 6 months = $15,000)

This gives you a solid emergency savings goal to aim for. If you don’t have six months’ worth of expenses stashed away, set a strategy to get there as quickly as possible.

Reduce Your Debt

You don’t want to be dealing with mounds of debt and a financial emergency at the same time, so planning to reduce your total amount of debt is important. Cutting your debt lowers your monthly expenses, which effectively lowers your emergency savings amount.

A valuable tip: Tackle the debt with the highest interest rate first, then focus on any remaining debt. Doing so can help improve your credit score as well.

Automate Savings

Prepare for the impact of a financial emergency by having your savings ready. Most workplaces allow you to split your direct deposit paycheck into two spots, so make sure some of your money is going directly into a savings account each pay period.

Source: SAGE Scholars Tuition Rewards. (2026). https://education.savvymoney.com/saving/how-to-be-prepared-for-a-financial-emergency/